Darling: Bank of England has poor controls

FORMER chancellor Alastair Darling has become the latest influential politician to call for a shake up at the top of the Bank of England, warning over the weekend that the institution is not properly prepared for its new regulatory duties.

He follows the Treasury Select Committee (TSC) of MPs, who have called for the Bank to replace its Court with a more modern oversight body to fully oversee its operations.

The Bank is set to take responsibility for financial stability next year, alongside its current role in setting monetary policy.

That will give it wide ranging powers over banks, for example in attempting to identify and deal with asset price bubbles, and in working to ensure banks have sufficient capital levels to cope with any future shocks.

In particular Darling objected to the power focused in the hands of the governor of the Bank of England, currently Sir Mervyn King.

"I think a structure that is reminiscent of Louis XIV's court of the Dun King is wholly inappropriate for the 21st century," Darling told the Sunday Telegraph. "If you were setting up any other organisation I find it inconceivable you'd leave it in the hands of one man or woman with no checks or balances."

All year the TSC has been calling for a new governance set up.

"The Bank must not be permitted to carry on with an outdated Court," said TSC chairman Andrew Tyrie over the summer.

"We must ensure that the Court can operate, as far as possible, according to corporate governance best practice."